Karachi: The government appears to be turning to philanthropists for help to overcome dolars shortage. Dar decided this in an effort to restock rapidly decreasing dollar reserves of the SBP which fell to $3.08 billion last week.
An upcoming drive to raise funds will likely be driven by credible social workers. Unlike the recent fund-raising drive, where the government remained in the spotlight.
Finance Minister Ishaq Dar stance
In his virtual speech on Islamic finance, Finance Minister Ishaq Dar requested the governor of central bank to collaborate with philanthropists. In their endeavor to alleviate the foreign exchange shortage by collecting dollars from overseas Pakistanis.
Mr. Dar’s comment was in reference to Bashir Farooqi’s declaration that he would organise a press conference for fund-raising with other eminent philanthropists.
Bashir Farooqi is the founder and chairman of Saylani Welfare International Trust. He is raising funds to ease the country’s cash shortage. According to him The Citizens Foundation, Akhuwat Foundation and Indus Hospital will join him. Moreover, he stated that they would strive to make $2 billion over five-year period.
The assets will not create any benefit for the investors. As the plan involves parking money for a decent timeframe with no expense to the exchequer.
Letter of Credits(LCs)
Businesses will be allowed to open letters of credit (LCs) for imported raw materials. Furthermore, the borrowed money will assist in restoring the jobs lost by “hundreds of thousands of people.”
An economist at a research firm said the initiative appeared to be a last-ditch effort to close the external financing deficit. Further facilitating the process for the conclusion of a letter of intent with the International Monetary Fund (IMF).
Negotiations regarding loan budget
Negotiations between the government and the IMF are currently underway to restart the $7 billion loan program. The extended delay in its recovery has left the central bank’s foreign exchange reserves at $3.1 billion. This amount is insufficient to fund even a single month’s worth of imports.
As ording to the analyst, taking on significant debt on a non-commercial basis will be challenging. As given, traditional methods of obtaining foreign cash from Pakistanis living abroad are already becoming less appealing. It involves remittances and Naya Pakistan Certificates with a denomination in dollars. In December, remittances totaled $2.4 billion, a 19% decrease from the prior year. Foreign inflows via Naya Pakistan Certificates were $190 million in the first half of 2022–23, compared to the full-year target of $1.63 billion.
The total amount of the nation’s external debt payments during 2022–2023 was $21 billion. Islamabad will have to pay $8 billion between the months of February and June.